PURCHASE POLICY IN RAILWAY

6.1.0 Features of Purchase Policy :

Purchase of materials, which was earlier regarded as routine activity has now become a professional function (which requires special skills and expertise) due to rapid changes in technologies and business environment.

A professional purchaser has to purchase materials

• of Right Quality (Just adequate quality)
• in Right quantities (Neither too much nor too little )
• at Right prices (Competitive but not unworkable)
• with Right delivery (With right mode of transportation at desired place on required time)
• from Right sources (Reliable sources having adequate potential, know-how, facilities and Financial capability and record of good performance).

These 5 Rights are popularly known as 5 R's of purchases.

Index-Store Department Guide - Indian Railway (Hindi)

 क्रय में विविध अधिमान्यताए 

मानकीकरण एवं उसकी उपयोगिता 

वित्तीय औचित्य के सिध्दांत 

भण्डार डिपो की संरचना 

INVENTORY MANAGEMENT

13.1.0 Definition Of Inventory :

The Dictionary meaning of Inventory is 'a list of goods'. In a wider sense, inventory can be defined as an idle resource which has an economic value. It is however, commonly used to indicate various items of stores kept in stock in order to meet future demands.

• In any organization, there may be following four types of inventory:

(a) Raw materials & parts-- These may include all raw materials, components and assemblies used in the manufacture of a product;

(b) Consumables & Spares -- These may include materials required for maintenance and day-to-day operation;

(c) Work in progress -- These are items under various stages of production not yet converted as finished goods;

(d) Finished Products -- Finished goods not yet sold or put into use.

RETURNED STORES

11.1.0 Introduction to Returned Stores :

As per para 1601 of Indian Railways Code for Stores Department all stores which have been previously issued for the services of the Railway and are no longer required on a work should normally be returned to the nominated Stores Depot. As debits are raised to user departments for the

materials issued to them by Stores Department, they get credits for the returned stores. It is very important that timely credits are given to returning departments for proper quantity at proper rates. Therefore the accountal system for returned stores is designed in such a manner that proper monitoring is done by returning department, Accounts department as well as Stores department, to ensure that Returned stores are timely and properly accounted in the books of Stores department. The system of documentation described below is to achieve this objective only.

11.1.1 All the returned stores are to be returned by various subordinates on Advice Note for returned stores (form S-1539) which is called "D S-8" on many Railways.

11.1.2 First of all returning subordinate will obtain approval of his controlling officer for returning the stores and then he will prepare Advice Note(D.S.-8) in 6 copies. He will get these advice notes signed by his controlling officer. If he is sending a material declaring it as unserviceable, he should obtain approval of competent authority. The material to be returned will either be booked by Rail to the nominated stores depot or through stores van system.

ISSUE AND DISTRIBUTION OF STORES

10.1.0 Introduction to Issue and Distribution of stores :

Stores Depot receives, inspects and stores various materials for the basic purpose of issuing them to various consumers of the Railways. These consumers may be various subordinates/officers of the divisions or other units such as workshop etc. and they may require the materials either for maintenance and operation or for new works. Therefore, the depot has to ensure a good system of issue of the materials to cater to all types of issues to all types of indentors. The system has to ensure following basic things.

(a) Materials should be issued on proper authority i.e. there should be a proper requisition from the indentor.

(b) There should be a proper system of keeping records of all requisitions submitted by the indentors so that various queries of the indentors about compliance of their requisitions may be adequately dealt with. This system should also be capable of providing managerial information required to monitor the productivity of the system and also to improve the same.

Receipt And Inspection of stores

9.1.0 Responsibility for Receipt and Inspection of Stores :

Receipt and Inspection of Stores is one of the very important activities because quality of incoming stores depends upon the effective inspection. Therefore, all the Stores depots have separate `Receipt' and Inspection' section. This Receipt section is generally under the charge of a DSK-1 who is assisted by other DSKs and also some ministerial staff.

Some of the Depots are having separate sections under `Receipt and Inspection' (`R') Section as under:

(a) Progress Section manned by ministerial staff under control of an OS/Chief Clerk.

(b) Unloading section manned by DSK and assisted by few clerks/labor.

(c) Inspection section manned by DSKs

TENDER EVALUATION AND MISCELLANEOUS POLICY ISSUES IN PURCHASES

8.1.0 Consideration Of Tenders :

Some of the important points to be kept in mind while tenders are under finalisation are discussed below:

(a) Attempt should always be made to finalize the tenders within the validity of the offer. All tenderers prescribe a definite date (known as validity date of offer) by which if decision is not taken by us, validity of the offer will lapse. As per law of contract, the acceptance of the offer should be out from our office by validity date though it is not necessary that the acceptance of offer should physically reach the supplier before that date.

(b) If the tender is not accepted by the validity date, we have to request the firm for extension of validity date. This delays the purchase and if in the meantime, prices of materials increase, the firm may not even extend the validity on the originally quoted price and we may have to purchase the material at higher prices. Many times, firms quote conditions which are not acceptable to us. For getting such conditions withdrawn or to get additional information, we have to seek commercial clarifications from the suppliers. We should not seek these clarifications in piecemeal and whatever clarifications are required, should be sought in the first instance itself.

Purchase Procedure on zonal Railways

7.0.0 Introduction to purchase procedure :

We are purchasing out of public exchequer and therefore we have to take precautions that public money is most efficiently used and we get best value of the Rupee. To meet this objective and also comply with purchase policies of Government of India, we have designed the purchase procedures in such a manner that we are able to meet these basic objectives and at the same time, are able to follow various policy guidelines of Government of India on purchase matters. The procedure should also ensure that purchase action is initiated against all the demands sent to purchase office and all avoidable delays in purchases are eliminated. Purchase procedures followed on most of the Railways is described in the following paragraphs.

7.1.0 Receipt and Registration of Demands :

All the requests for purchase of materials are known by the name 'Demand'. 

PLANNING OF STOCK ITEMS & SYSTEMS OF RECOUPMENT

5.1.0 Stocking Decisions :

The Stores Department has to first decide what items they would stock for meeting the demands of the various consumers. For items required for maintenance activities, the demands can be generated well in advance as the forecasting is done based on previous consumption pattern. The Stores Department can either stock those items or purchase as and when required to meet the specific demands. This can be decided upon considering the total cost of purchasing plus inventory carrying costs. Generally, it can be said that if the item is required frequently it is cheaper to stock and meet the demands from stock. But if an item is demanded say once or twice a year, it may be better to buy as and when required. For example, if a particular color of paint is used for maintenance of one or two rakes (like Pink City Express) and the demand is only twice a year, it may be better to buy the paint at the time of POH instead of stocking it all the time.

PLANNING OF NON-STOCK ITEMS AND PROCESSING OF REQUISITION

4.1.0 Instructions for making requisition of Non-Stock Items :

Non-Stock items are generally those items which do not have regular turn over. Planning of such items by Stores Department is difficult and therefore user departments plan for these items on the basis of various estimates for works and their programs for repairs and maintenance. As purchase always takes some time, advance planning even for non-stock items is also called for.

4.1.1 After working out the requirements, user departments submit those requirements to their feeding stores depot on requisition form No.S 1302. This requisition should be prepared on the basis of "one item on one form" in duplicate. One copy will be retained by the Indenting officer as his office copy and the other copy will be submitted to the feeding Stores Depot through the officer competent to sanction the requirements.

CLASSIFICATION, CODIFICATION AND NOMENCLATURE OF STORES ON INDIAN RAILWAYS

3.1.0 General Classification of Stores:

Stores Department on Indian Railways is required to give a service to various departments by making thousands of items available to their indenters as and when required. To give this service we have to maintain stocks of a large number of items called as "Stock items" whereas for other items which are not frequently required or are of one time requirement, no stocks are maintained. These items are purchased as and when required to meet specific demands and are called as `Non-stock items'. The stock items are further classified as under:

3.1.1 Ordinary Stores : These are generally such items of stores for which there is a regularturnover caused by a constant demand. These may be further subdivided as 

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